National Real Estate Investor | By Bendix Anderson
March 6, 2017
Developers still hope that Millennials will help fill the slowly growing number of vacant apartments across the United States. They might be right.
More than a million Millennials still live at home—less than a few years ago, but still a substantial number, including some who are likely to eventually rent apartments. “There’s potential upside in demand there,” says Ron Witten, founder of Witten Advisors, an advisory firm that focuses on the apartment sector.
The strong demand for apartments continues to surprise, so that even though the vacancy level is rising, it has done so very slowly so far. Developers have started construction on a large number of new apartments, but they are restrained by banks that are not eager to lend on new construction projects.
The result is a rental market that may be roughly in balance, as the vacancy rate creeps higher. “We don’t see much in the way of downward pressure on rents, but right now it is hard to underwrite significant pops in rent,” says Ben Sayles, director in the Boston office of capital services provider HFF.